By Liz Moyer
Investing.com -- The federal government is going to hit its $31.4 trillion borrowing limit on Jan. 19, which is less than a week away, and Treasury Secretary Janet Yellen has urged Congress to raise the debt ceiling.
The Treasury will start to make some maneuvers to buy some time and continue to meet the government’s obligations, but those efforts will largely be exhausted before early June, Yellen said Friday in a letter to House Speaker Kevin McCarthy (R., Calif.).
The statutory debt limit is the total amount of money the government can borrow to pay everything from Social Security and Medicare benefits to military salaries and interest on the national debt. Congress raised the amount in December 2021.
It is “critical that Congress act in a timely manner to increase or suspend the debt limit,” the letter said. “Failure to meet the government’s obligations would cause irreparable harm to the U.S. economy, the livelihoods of all Americans, and global financial stability.”
The letter resumes a now-familiar fight on Capitol Hill over the debt limit. Republicans, who now hold a majority in the House, have been insisting on spending cuts. Democrats, who control the White House and the Senate, have rejected those calls. In 2011, the fight over the debt ceiling led to a downgrade of the U.S.’s credit rating.
McCarthy won the speakership after 15 rounds of voting among a split in his own caucus. He has said lawmakers could put a cap on spending in exchange for raising the debt ceiling. “Spending is out of control here,” he said Thursday at his first press conference as Speaker. “We cannot continue around the same process.”
The Speaker added he would like to negotiate with Democrats. “I had a very good conversation with the president when he called me, and I told him I’d like to sit down with him early and work through these challenges.”